Alkermes plc (ALKS) Earnings Call Transcript & Summary

Okay. Good morning, everybody. Welcome to our session with Alkermes. My name is Chris Shibutani, member of the Goldman Sachs Equity Research team. And always a pleasure to sit down with Alkermes CEO, Richard Pops. I know that Sandy from the Investor Relations. I always probably have to take a little bit of an antacid when you and I sit down together, but I don't think there's going to be that much drama.

Last year was much more treacherous, right? There were just so many moving parts, things that you were trying to do. So kind of a calmer year which is cool. There's systole, diastole, right? There's push, there's pull. We're very focused on sort of the pipeline assets. But in the back room in the war room, I'm sure you're thinking about other things. So update us on Alkermes, state-of-the-art, June 2024. Where are the gears grinding? How are you feeling about things? Big picture?

So first of all, good to see you, Chris. Always good to see you, been a while since we've been in person. And I will make my usual admonishment about forward-looking statements and checking our risk factors. And we really do pay attention to try to articulate the challenges that the business faces as well as the opportunities. And I think your setup is exactly right. Contrast to a year ago, when we had so many different things in the air that we're hoping to resolve and how clear the picture is today, in June 2024, with the spending and the oncology business, the resolution of the J&J lawsuits, with the [ analytication ] with a focus on the pure neuroscience business, the quality of the data emerging from the orexin program, the commercial launch, all these things we can talk about. But at the core, you've got a pure-play neuroscience company that's highly profitable with a growing top line. And [Audio Gap] extremely increasingly excited about. Because I think it's reasonable to be skeptical about any small molecule CNS drug development program when they first entered the clinic. But similarly, as data accumulates you should be able to get more and more confident in the profile that's emerging. So this balance between the here and now of the commercial, which generates significant amount of cash and drives a certain baseline valuation of the company coupled with what we think is a potential explosive upside with the pipeline, we're quite comfortable. What's bothering us right now, I'd say, is the valuation hasn't moved. And if you do this for a long period of time like we have, ultimately, that takes care of itself. But I think it's an interesting moment for investors where I think you can sort of do the math on some of the various parts of the business and come to the conclusion that this might be a good opportunity to be looking at Alkermes.

Yes. I know. I think that that's very true. There's a certain simplicity now, which is quite elegant. And yet, you and Alkermes seem to like to do difficult things. Neuroscience, by definition, is a complex background, biology, understanding diseases, patients, I think, was this supposed to be the decade of the brain? And now I think we're kind of pushing it into the next. It better happened in this decade for my sake. But from the standpoint of just thinking about your focus in neuroscience, and you've been on either side of the legal table with some of the larger players with Biogen, and then became partners there. You know the ecosystem. Talk about where you're seeing some attractive opportunities to be a pure-play neuroscience company, but with a growing portfolio, whether it would be pipeline prospects. I know we have established commercial aspects. But I think your investor community really, is very much focused on the future and pipeline opportunities, et cetera. So neuroscience, not simple, you've been in a while. What do you see as attractive?

Well, I think we have 2 really distinctive competitive advantages. One derives from the experience we've built commercially in psychiatry, in addiction and serious mental health, where the government is the payer, gross to nets are high. Payers restrict access to medication, extensive use of generics. I mean, a really tough commercial area. But it's one where we figure out how to compete and thrive. That's a competitive advantage because any company developing a drug hoping to launch into that type of market, building that from scratch on a stand-alone basis for a single product, probably is not economic. So as we look at what's evolving in the development landscape, we think we could be a really strong partner for any of those types of assets. On the development side, what gets us most exciting, where our historic strength has been, Chris, has been where the biology in the brain is actually highly credential rather than speculative. What causes Alzheimer's disease? What is Lewy body dementia. We look at places where we know that the likelihood of a drug succeeding is quite high, but the challenge is making the molecule itself. So when we look at ARISTADA. ARISTADA is a novel prodrug of aripiprazole. No one else had been able to make it in a sterified form that could be injected for long action. LYBALVI, we knew that olanzapine was a brilliant antipsychotic. How could we attend it with the weight gain associated with olanzapine and even orexin. The orexin pathway in the brain is highly credentialed now as a driver of wakefulness, but the challenge is actually making a molecule. So when Alkermes scientist see an opportunity where the biology is not speculative, but the molecular design is quite challenging, and we like that.

I think that always has been one of the core competencies, sort of the engineering capabilities in essence, and that was very much the revenue platform that is now receding, but historically has been the case. So perhaps we'll dive into the actual orexin program since that tends to be the real focus of attention. Bring us up to date with where we're at. We just recently had a meeting down in Texas, I think SLEEP. You guys had a poster, some of the competitors have begun to show portions of their cards progressively. Just update us from the Alkermes perspective post the SLEEP meeting.

I think our takeaway from the SLEEP meeting is that the whole field made a very significant incremental advance with data from Takeda and from ourselves. Specifically, we're talking about these orexin 2 receptor agonist for the treatment of all narcolepsy. Narcolepsy type 1 is a deficiency of orexin. And so back to the point I was making before, the idea of replacing the natural neurotransmitter with a small molecule agonist makes all the sense in the world. It just happens to be very difficult to not just make a highly potent G-protein Coupled Recepto., agonist, one that's orally bioavailable, crosses the blood-brain barrier, binds the appropriate receptors in the brain in a wave form that is consistent with sleeping and waking every day. It's very challenging. And so what we saw in Houston last week was really profoundly important because Takeda showed data from their next-generation molecule showing beautiful efficacy and tolerability over an 8-week period. Answering some of the lingering questions the field has had. One was, does the effect of this wakefulness can attenuate over time? Is there technical access, because there have been some indication from earlier studies that could be the case. No, they saw no waning of effect. Tolerability over the 8-week period. Did any on-target or off-target things emerge that made patients not happy to be taking these medicines over time? On the contrary, the patient reported outcomes were brilliant for this 8-week period. And so also, the limitations of that drug became clear with a single dose and multiple doses per day. And really a focus only on NT1, when there's a large on NT2 population. We presented data from our NT1 cohort, the full cohort showing the data that led to us making a decision to go into Phase II with 3 doses. And now in the fall, we'll show our data from NT2 and IH at an additional 3 doses. So what Alkermes is beginning to profile is a range of doses given once a day, very well tolerated. So between the Phase II doses for NT1 and the Phase II doses for NT2, we'll be testing 4, 6, 8, 10, 14, 18. So a really nice continuous range of doses, all very well tolerated with data supporting their use in driving away from us. But in the real world, in like the real clinical practice, people are not using maintenance away from this test. They're dosing drugs to the efficacy and safety levels that they want for patients. So we think we -- if our data continue to bear out, we have a really strong competitive entrant now.

There's always an optimal profile from an efficacy standpoint, but the safety tolerability aspect tends to be what we -- who worry for a lot of our time in the business, thinking about drugs that will be used quite broadly misused, overdose, not taken, et cetera, skipped, et cetera. Talk specifically about how to interpret adverse event data coming from all these programs and how that actually translates to in the real world, people talk about visual disturbances. Just the whole word just counters up all sorts of worries, but contextualize adverse event profile and what you think is going to be an impactful, relevant orexin commercially available, what are we willing to accept in terms of tolerability by the time we get to the end of the road and get excited about a revenue-generating product?

So the first at management, and you know this, but I'll just say it for the record, every drug development program has risk associated with their idiosyncratic for the particular molecule or the derived from the class. And both are important. So nobody can ever say that our drug is fully characterized until the denominator has been well elaborated over lots and lots of patients. So with that said, this orexin 2 receptor agonist class, what's clear is you can drive a p-value, a statically significant result in wakefulness with 4 or 5 patients. I mean that's how profound the wakefulness aspects of it. So we shift then to this question of tolerability. And I think between the Takeda data and what we've shown, these are generally well-tolerated molecules and the side effects that are on target, you would expect would be Polycoria or urinary urgency or frequency. And then at higher doses, for some of the agents, not including ours, blood pressure and heart rate effects. Takeda data shows -- look like they are quite well tolerated, very mild, not clinical limiting at all. We've not seen a signal with cardiovascular or [ lab ] values in the clinic. For us, we reported in the healthy volunteers a handful of what were deemed under the AE profiling visual disturbances. What that meant literally was photosensitivity or brief blurred vision, typically mild and in the parlance of AE grading, mild means it's noted, but it doesn't affect you. They were self-limiting, they went away very quickly. In the NT1 patients, we didn't see any, albeit with a cohort of 10. And we saw one in the NT2 cohort, and we saw one in the IH cohort, both at the 25-milligram dose, which is higher than we're going to be going into Phase II. So even with those, we will still be categorized as mild, transient, not dose limiting. Recall that in the healthy volunteers, we dosed to 50 milligrams in the single ascending dose study without declaring maximum tolerability effect. So long answer to a simple question, these, and particularly with this increment of data from Takeda, these agents appear to be quite well tolerated.

And naturally, this is a chronic condition patients are expected to theoretically be on therapy for an extended period of time. What do we think about the natural history of some of these things that we're observing, you often see adverse events that can be modulated with those pauses or gradual progression of dose increases. Is there any indication either from the science, the biology or a clinical trial experience thus far that suggests that idiosyncratic can happen at any time versus initiation of therapy SKU? Just give us a sense?

No, we're seeing -- and that's why the data from Takeda last week were important. So no attenuation of efficacy between the 4-week and 8-week time points. And the patient-reported outcomes were incredibly favorable -- and those data are worth looking at. And because I've always harbored this concern, maintenance of wakefulness test is an objective measure of how long you stay awake. You can stay awake in a very agitated, uncomfortable state or you can stay awake in a very natural state. And I think the hypothesis was that because of replacing the deficient neurotransmitter that it should be a more natural sweet -- wakefulness rather than like a speedy stimulant driven one. And that's indeed what the PROs have shown. So we've seen no indication so far. Now our data are too limited to know from our own Phase II experience. But from the Takeda data, we don't see any inherent reason why you would stop the medication, need a holiday, dose adjustment, but more data will need to be developed for sure.

And then on the adverse event profile, the scientific basis for thinking that adverse events, if they occur initially, will resolve?

That's what the data suggests. I think the data we're showing on insomnia, for example, within the first 5 days are generally resolved. And yes, I think there's also a difference in looking interrogating adverse events in a sleep lab, where you're dosing and asking what people are feeling at any moment versus in the wild when people go home with a test article over a 6- or 8-week period in spontaneous AE reporting is just a different setting as well. But so far, we're very encouraged by this.

There was -- maybe going back 6 months to a year, this hypothesis about NT type 1 patients and type 2, and how much dosing would need to be, potentially scale, and with NT2 and IAH? You've reported some data and interesting observations that actually went counter to some of the concerns in terms of whether you really needed to amp up dosing to levels that theoretically might encroach upon thoughts of more adverse events possibly coming up. So NT type 2, Vibrance-2 study, Phase Ib results, 10 and 14 and 18 milligrams I have for the Phase II versus 5, 12 and 25 milligrams. Talk about the strategy and the mapping of the doses that you've chosen there.

So this has, I think, been one of the most exciting parts about our program has been our insight based on the modeling, a very complicated modeling of how we thought that the dose ranges for NT1, NT2 would compress and overlap. Original -- the original law was it could be as much 10x different. But with potent agents like ours with the PK profile that we have, our modeling suggested that the doses might overlap, which is why in the Phase Ib study that you referenced, we tested 5, 10, 25 or 5, 12, 25, what the doses were, hoping that we would bracket that range. And indeed, that's what we saw 5 is probably too low for the NT2 patients, and it's within the NT1 dose range, 25 doesn't look like you need to go that high based on the MWT. So we chose the doses and we like the way that it aligns up linearly with, as I mentioned, between NT1, NT2 because what you find when you talk to the thought leaders, that we tend to live in the world of NT1 epidemiology, NT2 epidemiology. In the real world, patients have all kinds of differential diagnoses shifts. They'll have NT2 patients, who are NT2 because they don't have cataplexy. But in every other respect, they look like an NT1 patient. NT1 patients who have long sleep latencies. So it's -- it argues therefore, for well-tolerated medicines with a large therapeutic index to be able to dose to whatever level a patient needs. Maxing out MWT, who says you need a max out an MWT for 8 hours? Some patients may not want to be up like that. Other people -- so just to be able to modulate the dose to accommodate the lifestyle and the preference of a patient, I think, is the hallmark of a good medicine.

The complexity of the disease here is a little bit challenging. There are some beautiful examples of keep it simple [ s***** ]. One of the reasons that like the [ stats ] did so well, it's like, we'll draw some blood, your LDL less than 100. It was like made on Madison Avenue. Obesity drugs, the number on the scale. Oversimplification, but it works beautifully. Irritable bowel syndrome drugs, they're looking at the iconography that the patients had to assess clinically, we won't even go into detail here. MWT, talk about this is a metric that seems to be validated from a scientific, I believe, regulatory standpoint as well. But then how does that interface with the real world in terms of how clinicians practice and manage patients and how a patient -- is there going to be an Apple app that may have MWT or something?

Yes. I think that's great. I think the... [Audio Gap]. Much more [indiscernible] first readout. MWT... [Audio Gap]. And has the virtue of it it's quantitative. You can run statistics on it. It's very objective. But as I said, in your patient journey, as you start presenting in adolescence or your adulthood with excessive sleepiness, people aren't running MWTs until we're late, late, late into disease. In fact, your diagnosis will probably be called without running an MWT. So the question is, how sleepy are you? How do you feel? And these patients are taking Modafinil and they're taking Adderall and they're taking SSRIs and they're taking oxybates at night. And it's a very simple assay actually. And you don't really have to have a sleep lab to run MWTs to tell whether you're having a clinical effect on these patients.

And then...

I just want to add a point on that because it's a research that we're doing that we're getting increasingly excited about. People tend to think about narcolepsy as being people are sleepy, but the actual implications of the disease for patients is like that sleepiness affects everything in their life. In fact, there are people are making trade-offs about what they do professionally, what they do socially, what they do interpersonally in order -- husband, whatever energy they have during the day because it's so precious for them. So the clinical impact of driving that wakefulness is far more profound than just a numerical change on the scale in an MWT test.

And then it's your sort of precommercial folks look out at the potential landscape here, how developed is that landscape when we think about Alzheimer's treatments, and it's like, well, there's actually a certain limited number of PET scans that are weighing down corners of buildings in hospitals. What about sleep labs, the necessity of having the infrastructure in place to -- to capture patients?

No. I think that it argues very favorably for it because that infrastructure exists in a number of ways. This is an orphan disease. There are 200,000 patients with prevalence with narcolepsy, 100,000 patients are diagnosed each year. Probably 75% of those are treated, and they're being treated with high-priced drugs like oxybate that are important for them, but not disease modifying. And the space remaining for when you talk to patients about what they can -- what they're looking for in new medicines is that they really want more, more drugs. So the regulatory lane is burned in, in terms of drugs that have been approved for this disease. The payer lane is burned in because they're being reimbursed already at a very high price. And I think the opportunity is actually to shorten that patient journey because many patients spend many years before they get the differential diagnosis that you actually have narcolepsy. And many of them report saying, a huge relief when they actually get the diagnosis because they've been saying, "Oh, you're just lazy. You're depressed. Snap out of it." All the stigma that comes with not being able to function at a full level. So with better drugs that are well-tolerated or disease-modifying, I think it can speed the time from first clinical presentation to diagnosis.

Let's talk about additional indications, idiopathic hypersomnia. Actually, you've shared some commentary about very specific decision that was made in terms of your planning of how much further you'll press into that opportunity. And it ties into bigger picture issues that you're quite familiar with from your tenure as being a CEO and being in the industry, IRA-related implications. So just clarify for us, where IH fits in and your thinking on that decision about whether to lean [Technical Difficulty] or not at this time?

I think the primary driver is the clarity and the simplicity of a narcolepsy indication for this first generation of orexin 2 receptor agonist. IH is a much more complicated patient population. For example, you wouldn't even use maintenance of wakefulness as an endpoint in an IH study because you'll have people in that test to actually stay awake quite a bit. So it's a different disease. IH patients actually sleep a lot. They can sleep 9, 10 hours a night. They just have a lot of sleep inertia. They're still tired during the -- it's a different presentation. So because we have a clear signal in narcolepsy and it's such a clear orphan indication, regulatory pathway, so 2680 will be a narcolepsy drug. With that said, the data in IH are very instructive because IH patients have orexin in their brains. And we also know from our single doses in healthy volunteers, we can drive wakefulness, EEG bands in patients who are not sleep deprived, who are normal. So this indicates, what comes next? If the core of the bull's eye is the replacement of a deficient neurotransmitter in a disease that's characterized by a lack of that transmitter, showing that, that circuitry is essential for wakefulness, the concentric shelves around that are things where just excessive daytime sleepiness is a hallmark of the disease. Those can be certain neurodegenerative conditions. They also could be psychiatric conditions. So that work is very active in our labs right now. So we've already nominated our next orexin compound. You'll hear more about that later this year. And there are likely others beyond that.

Okay. Yes, I know that was one of my follow-on questions here because I think the capabilities and the scientific work that's really been embedded within the company for close to a decade. I think 2016 is the year that I have in my mind in terms of when you really sort of committed to developing things scientifically. So we have another compound coming by the end of this year in terms of thinking about the [ 2OK ].

It's in GLP talks now.

Okay. Terrific. Is 2680 going to get a nickname that we're going to be able to do beyond a number soon?

You're one of the great curators of old nicknames of our drugs. We're going to stick with 2680 for a while.

Okay. Yes. It rolls off the tongue reasonably well. Let's talk about the commercial portfolio, LYBALVI, which obviously is another classic story for Alkermes, I think, where there was an element of under appreciation about how this drug could do in particularly at the beginning. And even you guys were kind of modest. I think the initial year 1 guidance was like, oh, we will quietly do $50 million to $70 million in revenues. And you soundly beat that. So that was a fun period of time for the stock because there was a nice cadence of beat and raise. Now we're getting kind of sort of towards adolescents as a product that's out there. It's a great category, but where is the drug finding its traction? And how much can you sort of push on commercial performance through things like direct-to-consumer, et cetera. How much is it just like the natural sleeping and growing versus, yes, if we put a little more muscle behind this, we can really push it harder. What's possible in that category with this drug?

Well, what I'm very proud of about LYBALVI is it's been an agent for instructing so many investors about how these markets actually work because it's a very complicated market. It's a very complicated market because it's dominated by government payers. And to the extent that commercial becomes more and more important later in the launch years, there is a tremendous movement to keep patients on generic drugs for cost containment reasons. This is a stigmatized patient population. They don't have strong advocates. So there are certain [ epics ] in the launch of the drug. In the beginning, because you essentially have open access into Medicare and Medicaid, the early years, the first, year 1 and year 2, were driven by government pay. And we know how to play in those markets because of VIVITROL and ARISTADA, and we're quite proficient in those markets. As we entered year 3 -- so the first year, like you said, we did $90-somewhat million second year, we did $190-something million. So the launch is a really nice launch. Entering year 3, now you're going to be doing circa $250 million to $300 million worth of business. The commercial payers are reimbursing for this reluctantly without rebates. Our need to get into the commercial channel grows, their desired to get cash flow from those non-rebated reimbursements is higher. And so you tend to come to a combination. We had mentioned, on the first quarter call, our first major commercial contract that opened up 25 million or so lives. And I can tell you today, this is the first time we've really talked about it, but we've just done the second one. So that will put us over 50 million commercial lives. In both cases, by really focusing on preserving our gross [indiscernible] and preserving profitability. So we don't expect a meaningful change in our gross-to-net assumption for this year even with opening now 50 million new commercial lives with evolving. So we're in a different phase of launch now where we're opening up more commercial. We have a strong foundation in government, DTC and digital and both broadcast become an essential part of the mix of the ongoing commercial business.

And then you do provide some milestone markers in terms of the number of potential prescribers. I think, 22,000 is kind of the denominator here. We think about the U.S. First quarter, it was 6,600. Is the trajectory continuing to progress a pace?

Absolutely. So you work on breadth, and then you assume that depth starts to take care of itself as people begin to get familiar with the drug. With breadth, we're still early enough in the launch where we are trying to get to make sure that doctors have an experience with LYBALVI because if they do that, then they'll see the efficacy of olanzapine, which is so clear.

The landscape is poised to potentially change novel mechanisms of action, muscarinic agents, potential approval at the end of September, a couple in the development stage, investors tend to be quite keen. The backdrop is often about how we haven't seen anything new for quite a long time and that there's an attractive profile. Maybe how does this translate? What does this do in terms of any potential turbulence of the trajectory with LYBALVI? Why and why not?

The schizophrenia market. So the first muscarinic approval will come as monotherapy in schizophrenia. That's with the PDUFA date in the fall for it will be. So it's a twice-a-day drug given as monotherapy in schizophrenia. So it's a very circumscribed commercial opportunity. As you know, most of the brands become bigger brands in this space with additional indications beyond schizophrenia for reasons, in part, which we talked about, which is government pay, restricted access, high gross to nets, things like that. What I like about the muscarinics coming to market is that these patients have not had access to branded medications for the large part. Payers bias has been -- the brand is not much different, then the generics will keep you on generics. So new mechanisms force a reevaluation of, okay, how good are these drugs? And if we start thinking about efficacy for these patients is being one of the drivers, that does really well for LYBALVI, because LYBALVI is playing in that part of the market, which is all driven by efficacy, not necessarily about tolerability per se because it's the efficacy of olanzapine. So the tailwind this is an idea of branded medications, more doctors' offices going through the paperwork to put people on branded medications looking at efficacy end points. The headwinds are just share of voice, right? You get a new entrant in the marketplace. These drugs, you don't displace somebody on an atypical antipsychotic with schizophrenia by launching a new drug. As you know, Chris, this market is entirely a churn market. The average length of therapy on a branded antipsychotic is 6 months for patients with a chronic disease. So all the patients, who are doing so well in LYBALVI, unfortunately, most of them will end up not being on LYBALVI, and we'll pick up patients from other therapies as well. So that's why DTC and share of voice is important because you just want to be in the mix for those changes that inevitably occur, that derive from the nature of the disease itself.

When we think about iterations of product profile and presentation, the long-acting injectable is something that you have been active with ARISTADA. And I've always been kind of struck how in the U.S., the percentage of patients or the penetration of long-acting injectables which for all sorts of reasons, actually sounds like a pretty logical solution, particularly in the management of patients how is that really gotten that far. I remember talking to you guys maybe half a decade ago, and it was kind of in that 10% to 15% in the U.S., a little bit higher in Europe, where there's a little bit of an enforcement. It's like you need this drug. This is the version you're going to take. Where are we with penetration? And I ask that in part again because the investment community is contemplating with the next-generation mechanism of action, it's just like long-acting injectables, that could be really cool. You're already living it. So inform us what's going on with the long-acting injectable dynamic and why maybe we're at the place where we are at in the U.S. in terms of penetration there?

We accept it. It's exactly correct. They're underutilized in the U.S. significantly. And even with more entrants coming into the market, they're significantly underutilized. A lot of it has to do with structural issues in the market where a number, obviously, payers are restricting access to branded medications to begin with. Doctors are reluctant in the U.S. to give injectable medications to their patients with schizophrenia, thinking that patients won't tolerate or accept it. And also, many of the physicians just don't have facilities for intramuscular injections, many psychiatrists don't touch their patients. And so the oral medications in the U.S. are at the dominant form. With that said, the data accumulated over many, many years. It's so overwhelmed, in the favor of a long-acting injectable treatment. And even with patients on our drugs, on ARISTADA, average length of therapy isn't that much greater than what you see with the orals. The problem is these patients have schizophrenia. And often schizophrenic patients will go on a medication, they'll have some type of symptomatic relief, but there'll be some -- either reason they decide that they don't need to take the drug in market are fine or some limiting side effect, they don't feel like taking the drug anymore, so they'll stop taking the drug. And then relapse occurs. You get chronic progression of the brain disease. And their whole trajectory of their life begins to change with repeated relapses. So it's a tragedy that more patients on long-acting.

Let's generate a little bit of clickbait. GLP-1, that's now officially in the transcript. So there's hypothesis about the potential based upon receptors in the brain that it may have some tweaking benefits in addictive behaviors. VIVITROL is very much one of the well-established soldiers in that battlefield of trying to address addictions. Any perspectives on what you're observing, whether you believe this is possible, any chances to play together, competition? Just any thoughts there.

Two thoughts before we run out of time. First on that point, VIVITROL, VIVITROL patients, unfortunately, a lot of them were Medicaid patients, they're not really getting active [Technical Difficulty] expensive commercial profits.

Right.

So we're dealing in a different part of the market. I'm actually optimistic some of these GLPs could have an effect on some of these were more disorders for sure. VIVITROL is amazing because it continues to grow in alcohol strongly. We don't see that in the [indiscernible]. The point I want to make, Chris, before we...

Send a message to Frank Baldino.

Rest in [ peace ].

Exactly.

We see the security as being really undervalued, right now. And we had talked about in our Q1 call, a share repurchase option. And often, companies do that and don't really do much on it, but particularly coming out of SLEEP. So I just want to let you know, where we've been actively buying the stock in the market right now. And you'll see updates on that on our quarterly calls and whatnot. But it's -- as we look at allocated capital right now, we'll be generating excess cash going forward. We'll use it for our growth opportunities with LYBALVI and with Orexin, but now we -- but even with that, we have excess cash and we see this is a good time to put our money where it matters.

That was definitely going to be my close in terms of the profitability profile, which is a commitment. And I think that there's tremendous scope to watch that growth trajectory there, but then that cash and sort of capital allocation prioritization there. So I think that, that's something that should be well received in thinking about the broadening there because certainly, we agree from the standpoint of when we look at your outlook, and the opportunity to express that point of view through share repurchases, I think, gives you another tool in your toolkit. Diversification are what are the core thesis as we continue to watch the development of a very exciting opportunity for the orexins, but also now with this leaner, more focused company, with profitability and growth, it's great to be able to see you flex that opportunity to return cash to shareholders as well. So I think we covered a lot. How do we do, Sandy? Okay? Excellent. Okay. So with that, we'll close. Richard, great to talk to you always.

Pleasure. Thank you.